How to Negotiate a Severance Package

How to Negotiate a Severance Package

What Is a Severance Package?

Sometimes we may have to leave a position at work for reasons out of our control. For instance, a company might be bought by a group of entrepreneurs that want to carry out a full restructure, and as a result, your position has been deemed redundant.

In a case like this, you will be offered severance payment. It is not always something we want to consider but knowing how you can get a good severance package may help you move forward in your career.

A severance package usually consists of around two weeks of your usual salary and is negotiated beforehand.

Depending on the circumstances and the time you are given to prepare for life after severance, you may be offered more.

The legal requirements surrounding severance pay differ from state to state, but they often form part of a contract that you sign either before or during employment.

If you are concerned about your severance package, it is best to contact your HR team so that you can negotiate what it will look like if you ever receive one.

Negotiating a severance package is never easy for either an employee or an employer, so it is strongly advised that you do this when the communication is at its best between you and a manager.

In this article, we will outline why it is recommended to negotiate severance terms. You will learn what you must look out for when conducting these negotiations.

We will also talk you through obtaining the best severance package to put you in a strong position if your employment is unexpectedly terminated.

Why You Should Negotiate Severance Terms

Like the negotiation of a pay rise or salary, coming to terms with an agreeable severance payment requires skill and patience.

Before we discuss how best to approach these negotiations, it is essential to outline why you must negotiate severance terms if given the opportunity.

The benefits are not only restricted to you. If you work for a reputable corporation, they will also be interested in coming to agreeable terms. A failure in negotiation reflects badly on their reputation, and it is worth keeping this in mind before you enter the negotiation process.

Furthermore, if they do not offer you severance payment or the opportunity to negotiate these terms, it is possible that you can sue them for financial misconduct.

Checking your contract and the fine print regarding severance will determine if you have plausible evidence to press charges. The legalities are dependent upon where you reside and what state you work in.

Here are the major reasons why you need to negotiate a severance payment.

Financial Reward

The most obvious reason to negotiate terms is the potential financial reward awaiting at the end.

If you are good with communication and are persuasive, you may have the opportunity to get more than you initially bargained for.

A severance payment will not make you rich, but it can act as a buffer until you find your next position. Without such a payment, you may struggle to cover the utility bills or mortgage for a couple of months.

The money you gain from severance can also be put towards learning new skills. You may feel disillusioned with the industry you have just left and may want a career change.

You may want to use the money to build a portfolio and re-invent your career prospects. How you use the money is entirely your own choice, but you need to have it in order to make these decisions.


Leaving on bad terms is not good for either you or the company. A sour end often means no communication, no reference and no opportunity to potentially reconcile with people.

You must leave the position as if you are leaving a rental property. If you create a mess on purpose and refuse to maintain contact with the right personnel – even if they have been unfair – this will only harm your circumstances further.

Being cordial and respectful even if the cards are not in your favor is an essential part of moving forward in your career.

Having good communications with an HR member or a team manager will possibly get you a strong reference for use in future job applications.

Being respectful may even lead to opportunities in the same industry. Depending on the reasons for severance, and if it is not because of retirement, there might be another opportunity in the same type of work.

The job may have ended with severance, but your reputation is carried with you even after you leave.


If severance payment is a legal requirement in the state you work, then you are in your rights to push forward with negotiations.

Exercising these rights is a sure way to enter negotiations and ensure that you receive a severance payment.

Depending on whether you have initially signed a contract stating exact terms, you may also be in your rights to negotiate a higher severance payment.

Check with your HR manager about the legalities surrounding severance packages and if you are entitled to negotiate this.

Bringing up severance may set off alarm bells with your manager or HR, as it is associated with leaving a position, so remember to assure the person you are discussing this with that it is just a formality.

As mentioned above, do this when communications are good, and you have a cordial relationship with your employer.

If you feel it is not possible to discuss this, then you may have to conduct your own research.

Their failure to inform you or avoid this discussion can lead to financial repercussions on their behalf, so it is likely they will want to talk about it.


Negotiation is never an easy process, and the only way you can truly become better at it is through practice.

Maybe you are aware that things are changing in the workplace and you have seen several staff members become redundant over the course of the last few weeks.

If you are in a similar situation to this, there is no harm in arranging to negotiate a severance package.

How to Negotiate a Severance Package
How to Negotiate a Severance Package

The chance to practice these skills does not come around often, and if you frame this to yourself as an opportunity, you are more likely to get better results than you bargained for.

What’s more, being open to discussing these terms shows maturity and responsibility that will be respected.

Deciding to negotiate these terms will help you prepare to handle rejection and learn how to navigate your demands effectively.

Even if you only frame it as an inquiry, the potential response will give you confidence for future negotiations.

How to Negotiate a Severance Package

As with all negotiations, you may encounter difficulties and compromises during the discussion. You can prepare for these to a certain extent.

Here are the major points you need to consider when negotiating a severance package.


Depending on your relationships in your workplace, it is best to have these conversations with someone you get on well with.

If this is not an option, think about how you can approach the other party with respect.

Identify what they want to get out of the conversation. There may be less on the line for them than for you, but trying to see things from their perspective is a good way of understanding how to navigate the negotiation.

Also, try to understand how they generally negotiate with others. If you have previous experience with them or know of negotiations prior to yours, identify what the outcomes were.


Severance negotiations should be conducted before there is pressure to do so. However, this is not a likely scenario as most of us do not consider it when it is not an imminent reality.

Because of this, most severance negotiations take place shortly before severance or redundancy is issued.

It is good to get an idea of the timeframe you are working within. If you have two weeks before you are made redundant, try and choose an appropriate time to instigate negotiations.

The more time available to you, the more leverage you will have, so it is important to take the opportunity when it is presented. Once you have done this, you can begin to think about how you can move forward with life after severance.


Your approach and rapport matter in a negotiation. Striking a balance is the ideal way to achieve a good outcome. You do not want to be either aggressive or too passive during the discussions.

Try to remain clear about what you intend to achieve from the negotiations and show that you are open to compromises. To do this, ask questions, judge perspectives, and most of all, remain calm during the conversation. Try and remove all emotion from the discussion, even if it is strained.

Financial Outcome

You may already have an idea of what you will receive financially from severance, but there are other points to consider during the negotiations.

It is worthwhile taking into consideration any vacation you may be contracted to, if any insurance has been taken from your salary, and if there are any other contractual clauses related to money.

If you have a copy of your contract or can obtain one, spend some time reading through the document thoroughly. Highlighting what areas you can discuss during negotiations will improve your outcome.

It is also a good idea to discuss other alternatives to financial outcomes. During your negotiation, you can discuss stock options, references and the possibility of finding opportunities elsewhere.

Evidence and Confirmation

Once the negotiations reach a satisfactory point, it is essential that you get a print copy of what you have agreed.

Asking your HR team to write up the agreement is a good starting point. Ensure that you both have a copy of any documents that come out of the discussions.

With the agreed settlement and severance package in hand, you must read through all the clauses carefully before signing off. This seems an obvious point, but failure to do so may land you in an unfavorable situation.

Having this document to hand also serves you well in your future career prospects. Having the evidence of why and when you left a position of employment demonstrates your integrity.

Final Thoughts

A severance package is never an ideal situation simply because it comes from losing a position against your wishes.

However, as unfortunate as the circumstance may be, you can try and turn it into an opportunity.

Obtaining a good severance payment and terms acts as a bridge for future employment. Acting wisely and being clear with what you want from a severance negotiation is the best policy for moving forward in your career.

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